After rolling out new bacon packaging, Smithfield sees more opportunities ahead.

MeatPoultry.com,
9/25/2012

by Bryan Salvage

It’s common knowledge the US meat case has experienced turbulent times this past year due to higher product costs, tightening supplies and a host of other reasons. As consumers continue holding tightly to their food budget purse strings, one thing has remained constant throughout this volatile time – consumers still love their bacon, insists Patrick Fleming, director of retail marketing for the National Pork Board.

Recent statistics from SymphonyIRI Group, a Chicago-based market research firm, support this love is still in bloom. For the latest 52 weeks ending July 8, sales of retail refrigerated bacon totaled $2.5 billion – up 3.85 percent from the same year-ago period.

While retail new product launches have been sluggish this past year, in large part as a result of the economy, one retail bacon product launch made last year by Smithfield Packing Co. Inc. offers revolutionary bacon packaging features that are helping it and parent company Smithfield Foods boost their bottom lines.

Smithfield’s PouchPack

Late in the Fall of 2011, Smithfield’s PouchPack Bacon was launched and product began appearing on shelves in November, says Chad Baker, senior vice president of retail and foodservice brands with Smithfield Packing Co. Inc. PouchPack Bacon comes in a 12-oz. package made by WinPak that includes two individual, break-away, 6-oz. packages. Two side-by-side perforated pouches containing six slices of bacon are contained in each pouch and sealed with EZ peel film allowing one of them to be used for another dining occasion.

After commissioning research to assess opportunities in this segment, Smithfield learned that consumers were generally unsatisfied with traditional bacon packaging.

“With the average consumer serving two to three slices of bacon to one to two people, we decided that six slices of bacon per pouch was the ideal size,” Baker explains. “Our consumers also told us they did not like having to store leftover, raw bacon or cook bacon they did not intend to consume at that particular meal. Therefore, they told us they were wasting bacon. We wanted to deliver all of the taste of Smithfield bacon without the waste. Our commercials [on this innovation] have been running ever since.”

On a roll

Earlier this year, C. Larry Pope, Smithfield Foods president and CEO, told analysts the retail bacon category volume was down 3.4 percent. “Our bacon sales are up 10.8 percent,” he added. “[Category] pricing is up 8.4 percent. Ours is up 23.1 percent.”

Part of the reason behind Smithfield’s bacon success was changing its product packaging. “You don’t buy 16 oz. of bacon anymore,” Pope said. “You buy 12 ozs. of bacon and then we split it into two, 6-oz.packages. You’ve only got essentially one-third of the package, and you don’t even affect the shelf-life of the other part of the package. You lower the price point and get better margins, better convenience and better packaging.”

Focused on consumers

When asked to expand on Smithfield’s ongoing retail bacon success, Baker says, “Smithfield has increased consumer-focused marketing in the bacon category and we work with our retail partners to make sure consumers can find premium Smithfield Bacon at their local grocer. By bringing new packaging innovation to this high-volume category, Smithfield has been able to leverage this launch to bring more excitement to the category, which has contributed to overall Smithfield branded bacon growth across new and existing product offerings.”

Not only are Maple Leaf and Farmland bacon also being co-packed in this unique PouchPack packaging concept, Smithfield plans to expand use of the PouchPack Bacon to other bacon products in the future, Baker says.

Expect Smithfield bacon packaging to further evolve in the future, Baker says.

“The consumer is key and we will continue to draw insights from their purchasing and usage behavior,” he adds. “Delivering premium bacon in the best possible package is our goal and we will continue to evolve. Our focus today is on educating consumers on this new packaging functionality and driving trial.”

BACON USE SHIFTS

While consumers continue their love affair with bacon, Patrick Fleming, director of retail marketing for the National Pork Board, has seen a general shift in consumer use of this mainstay product. “They have been more adventuresome in flavors and including bacon in other meal occasions outside of breakfast,” he says.

One of the biggest trends Fleming has seen is using bacon as a condiment. “Today’s consumers are topping their burgers with bacon slices, crumbling bacon into their mac and cheese and wrapping dates in bacon for appetizers. We expect this trend to continue into the coming years,” he says.

There is more variety today when it comes to bacon products at retail. “In addition to national brands, we are seeing many retailers offer bacon under a private-label,” Fleming adds. According to Symphony/IRI, private-label bacon holds the No. 1 position in the top-10 leaders of refrigerated retail bacon sales with $590,482,500 in sales for the 52 weeks ending July 8 – up a whopping 23.5 percent from the year-earlier period.

From a product standpoint, Fleming points out price increases are happening across all proteins, including bacon – but not to worry.

“Although prices are rising, we do not see this dramatically changing consumer’s consumption of bacon. Consumers may adjust their purchase habits due to pricing issues, but we don’t believe consumers will discontinue their love affair with bacon,” he concludes.